Demonstrate Interest and Payment Cycle

What happens here

The presenter then demonstrates the monthly cycle of interest accrual and minimum payments. For the first month, he places a small wooden block labeled 'interest' on top of the initial debt block, symbolizing the interest added by the bank. Next, he removes another small wooden block labeled 'payment', illustrating that the payment covers the 'interest' block and only a tiny portion of the 'debt' block, representing the principal. This process is repeated for subsequent months, consistently showing that minimum payments primarily address the accumulating interest, with very little actually reducing the principal debt. The demonstration visually highlights that each payment removes the 'interest' block first, and then a very small 'principal' piece, leaving the main debt almost untouched. The presenter quantifies this by suggesting each small block represents $30. He explains that if $90 is paid, approximately $52.50 goes towards interest, and only $37.50 goes towards reducing the principal, underscoring the slow reduction of the actual debt.

Goal: Show the disproportionate impact of minimum payments on interest versus principal.